Class 12 Micro Economics - Chapter Production and Costs NCERT Solutions | What are the average fixed cost, average

What is the total product of input?

Let the production function of a firm be Q=5L1/2K1/2Q=5L1/2K1/2 Find out the maximum possible output that the firm can produce with 100 units of LL and 100 units of KK.

Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve? 

When does a production function satisfy decreasing returns to scale? 

What do the long-run marginal cost and the average cost curves look like? 

Explain the relationship between the marginal products and the total product of an input. 

What does the average fixed cost curve look like? Why does it look so? 

Why is the short-run marginal cost curve 'U'-shaped? 

Explain the concept of a production function

What is the law of variable proportions? 

What would be the shape of the demand curve so that the total revenue curve is?

(a) A positively sloped straight line passing through the origin?

(b) A horizontal line?

Explain market equilibrium.

Discuss the central problems of an economy.

What are the characteristics of a perfectly competitive market?

What do you mean by the budget set of a consumer?

From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:

When do we say that there is an excess demand for a commodity in the market?

What do you mean by the production possibilities of an economy?

How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?

What is budget line?

How does the budget line change if the price of good 2 decreases by a rupee
but the price of good 1 and the consumer’s income remain unchanged?

How does the budget line change if the consumer’s income increases to Rs 40 but the prices remain unchanged?

What do you mean by the production possibilities of an economy?

How does an increase in the price of an input affect the supply curve of a firm?

There are three identical firms in a market. The following table shows the supply schedule of firm 1. Compute the market supply schedule.

Considering the same demand curve as in exercise 22, now let us understand for free entry and exit of the firms producing commodity X. Also assume the market consists of identical firms producing commodity X. Let the supply curve of a single firm be explained?

q*= 8+3p for p ≥ 20

= 0 for 0 ≤ p ≤ Rs 20

(a) What is the significance of p =20?

(b) At what price will the market for X be in equilibrium? State the reason for your answer.

(c) Calculate the equilibrium quantity and number of firms. 

Consider a market with two firms. In the following table, columns labelled as SS₁ and SS₂ give the supply schedules of firm 1 and firm 2 respectively. Compute the market supply schedule.

Suppose the demand and supply curve of commodity XX in a perfectly competitive market are given by:

qD =700 - p

qs = 500 + 3p for p ≥ 15

= 0 or 0 ≤ p <15

Assume that the market consists of identical firms. Identify the reason behind the market supply of commodity X being zero at any price less than Rs 15. What will be the equilibrium price for this commodity? At equilibrium, what quantity of X will be produced?

Consider a market with two firms. The following table shows the supply schedules of the two firms: the SS₁ column gives the supply schedule of firm 1 and the SS₂ column gives the supply schedule of firm 2. Compute the market supply schedule.

A shift in demand curve has a larger effect on price and smaller effect on quantity when the number of firms is fixed compared to the situation when free entry and exits is permitted. Explain.